The City Council in early August put into motion the formal process to place on the Nov. 7, ballot on whether to extend the current sales tax to construct a new aquatic center. That ballot will read as follows:

Shall the City of Marshall be authorized to extend a sales and use tax of one-half of one percent (0.50%) for the purpose of paying the costs of collecting and administering the tax and paying for the construction of a new municipal aquatic center in the City, plus associated bonding costs, including interest on any bonds, and issue its general obligation bonds in an aggregate principal amount not to exceed $18,370,000, plus the cost of issuing the bonds, including interest on the bonds, to finance the construction of a new municipal aquatic center in the City?

Why sales tax versus property taxes?

Sales tax is paid for by anyone shopping in Marshall. Sales tax provides a city like Marshall with the opportunity of spreading the cost of projects across a broader group of people. As a regional center, visitors to Marshall do not contribute directly to paying for infrastructure maintenance and improvement. Funding the projects with a local sales tax will more closely distribute the costs of the project to the users of the facilities as compared to a property tax increase.

Property taxes are only paid by those who own property in Marshall. If property taxes were used to pay for these projects, this would require the City to increase the amount of property tax collected impacting the amount of money that all property taxpayers in Marshall would pay.

Minnesota’s sales tax is much more progressive than other sales taxes because it exempts food and clothing. Additionally other essential items like prescriptions, over-the-counter medications, and medical equipment are not taxable in Minnesota. Also, sales taxes in Minnesota are slightly more progressive than rental property taxes.

Some additional points regarding the sales tax:

• Sale tax can only be used to fund an approved local project that would otherwise be paid for with property taxes.

• The sales tax equates to 50 cents for every $100 dollars spent. It is estimated that an individual would pay approximately $70 annually in sales tax for the city’s sales tax.

The city of Marshall currently collects a one-half of one percent of sales tax for Red Baron and MERIT facilities. These project payments will end early, thus giving us allowance to pay for an aquatic center for twenty years with approximately $1.5 million to $1.8 million collected annually in sales tax revenue.

• A survey of city residents in 2021 revealed that the community’s reaction to an extension of the current sales tax was generally good, with a 74% positive response supporting the sales tax.

• A recently completed study by the University of Minnesota indicated that approximately 67% of the sales tax collected in Marshall, comes from those that do not live in Marshall.

This past Legislative session, a two-year moratorium on sales tax authorizations was put into place. This means that if the referendum is not approved, the city would have to consider whether it is viable to construct a new aquatic center for the foreseeable future.

More than 80 cities in Minnesota have a sales tax to fund a variety of capital projects. The referendum proposes to renew the existing half-cent local sales tax option to construct a new aquatic center. If approved by voters, the sales tax rate would not change.

— Sharon Hanson is the city administrator for the city of Marshall